Labour make 'pro-business' promise not to hike corporation tax

Shadow Chancellor Ed Balls has pledged to keep a low rate of corporation tax if Labour win the 2015 election, and has promised that his party would be “pro-business not business as usual”.

In a speech to the London School of Business, Mr Balls said that Labour would be “committed to maintaining… the most competitive rate of corporation tax in the G7.”

However, he ruled out a cut to the rate, instead suggesting that his party would “cut and then freeze business rates for more than 1.5 million business properties” and “develop a business tax system that promotes long-term investment, supports enterprise and innovation.” This might include “a series of reforms including a lower rate of capital gains tax for long-term investors” and an Allowance for Corporate Equity, which would make “long-term investment attractive to the investor as well as to the recipient of funding.”

Mr Balls’ speech has been seen as an attempt to win back business support after a series of Labour announcements have been badly received by business groups. The CBI Director-General John Cridland has been critical of Labour saying the business community had been left “scratching its head” over such things as “wage controls, price controls, land controls, tax increasing, and dividing large and small companies”.

However, the CBI has welcomed Ed Balls’ latest speech, saying that boosting long-term investment would “help firms of all sizes harness their potential”.

Meanwhile, The Times has reported that Chancellor George Osborne plans to include a pledge to merge income tax and national insurance in the Conservatives’ 2015 election manifesto. Under the merger basic rate income tax payers would pay 32% (compared to 20% income tax today) and higher rate taxpayers would pay 52% (up from 40%), the newspaper claims. However, Treasury officials have denied the story.